Here at Long & Company, we field plenty of questions about the differences between required and full coverage auto insurance policies. We understand our clients ask these questions because they’re trying to balance premium payments against protecting themselves as well as they should.
Naturally, minimum liability insurance premiums appear cheaper; however, we still have our share of customers who either need or want to invest in more robust protection. Take a few moments to understand what full coverage auto insurance means and why it could matter to you.
Are You Fully Covered for Liability?
In insurance, liability describes coverage that pays for the other’s guys’ property damages or injuries if an accident is your fault. In common use, liability insurance usually refers to the state’s mandated coverage for drivers. According to Wisconsin’s Department of Transportation, these are the minimums required for liability coverage:
- Property damage: $10,000
- Per injury or death: $25,000
- Total injury or death: $50,000
In addition to injury liability, Wisconsin also mandates the same amount of uninsured motorist protection for yourself and your passengers. This helps pay medical bills, even if the other driver caused the accident but lacks insurance.
The amounts above represent the minimum requirements. They don’t necessarily mean that you’re fully covered. For instance, it’s just about impossible to find a new car with a value of only $10,000 these days. If you caused an accident and totaled a new Mercedes, the owner or the owner’s insurance company could potentially ask you to pay the difference between the vehicle’s value and your policy limit.
When we speak to clients who have a lot to lose, like homes and retirement accounts, we may suggest raising limits on their base policy or purchasing an umbrella policy. An umbrella policy adds extra liability to such base policies as car and homeowners insurance in increments of one million dollars. Umbrella insurance premiums offer high-worth clients a way to protect their assets against a variety of liability claims.
What Does Full Coverage Really Mean?
Full coverage car insurance generally refers to a package of different kinds of protection that will at least add comprehensive and collision insurance to liability. For instance:
- Collision covers damage to your vehicle, regardless of fault. Another at-fault driver’s insurance would pay first, but your policy would still pay if that driver lacks insurance.
- Comprehensive helps pay for non-accident damage to your car. Common examples include hail and theft.
Since these types of insurance help pay to repair or replace your vehicle, the insurer will tie the limits to your vehicle’s value. If you still owe a balance on your auto loan, your lender will certainly require this kind of property coverage on your vehicle. If you don’t have a loan, you could consider dropping them if you have plenty of resources to repair or replace the vehicle.
Still, you should still consider the benefits of keeping them. For example, your collision insurance would help repair your car if a driver without insurance wrecked it. That’s not something that your base liability policy would cover. If paying an unexpected bill to repair or replace your car would put you in a financial bind, you might decide the extra premium for comprehensive and collision insurance give you needed protection.
Other kinds of coverage to consider adding to your package include underinsured motorist and medical payments insurance:
- If you or a passenger are injured, underinsured motorist protection will help pay bills after the other, at-fault driver’s insurance has been exhausted.
- Medical payments coverage will help pay for medical bills for you and your family, no matter who is at fault. It will also protect you and your family if you’re injured by a vehicle while you’re riding in another vehicle or even walking. Even if you already have health insurance, you might consider these extra protections to pay for out-of-pocket expenses that typical medical plans don’t cover.
Are You Fully Covered?
No insurance can cover you against every potential hazard. For example, typical policies won’t reimburse you for wear and tear, driving off-road, and in many cases, business use of your vehicle. You can purchase optional insurance that will provide more protection than coverage that is usually referred to as full coverage. If you’re in Wisconsin, contact us here at Long & Company, Inc. to explore your coverage options, compare competitive premium quotes, and have your questions answered.